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Illegal Monthly Passes Worth Millions Allegedly Produced And Sold To Riders

BOSTON - An employee of an MBTA subcontractor and a female associate have both been arraigned in connection with an alleged scheme to illegally produce millions of dollars worth of MBTA monthly passes and sell them directly to riders, Attorney General Martha Coakley announced today.

Andres Townes, age 27, and Gloria Escobar, age 27, both of Revere, were both arrested yesterday by MBTA Transit Police and Massachusetts State Police assigned to the Attorney General's Office. Today, Townes and Escobar were each arraigned before District Court Judge Michael C. Laurenzano in Salem District Court on charges of Larceny over $250 and Conspiracy to Commit Larceny over $250. Both entered pleas of not guilty and Judge Laurenzano ordered that Townes be held on $250,000 cash bail. Escobar was ordered held on $100,000 cash bail

"We allege that these defendants executed an extensive public corruption scheme to produce fraudulent passes and sell them for their own personal gain," AG Coakley said. "Our investigation with the MBTA remains ongoing."

This investigation began on March 11 after an alert conductor on the Massachusetts Bay Commuter Rail (MBCR) noticed a pass that appeared different in color. Passengers aboard the Commuter Rail present their passes for visual inspection. The passenger told the conductor the pass had gone through the laundry and said that he had purchased the pass on Craigslist. The conductor confiscated the pass and turned it over to the MBTA Transit Police. Further investigation showed that despite opening electronic gates, the printed serial number in the MBTA database did not show the card ever being activated. The MBTA soon discovered hundreds of similar passes in use by passengers.

These stolen monthly "ghost" passes were being used by passengers on all forms of MBTA transportation, including the commuter rail, subway, and buses. These were authentic passes that had been fraudulently produced. Investigators discovered that all the stolen passes had been activated in Beverly, Massachusetts by a machine owned by the MBTA and used by Cubic Transportation Systems, Inc. ("Cubic"). Cubic is an independent vendor which handles the sale and fulfillment of MBTA passes purchased on-line and over the telephone.

Townes is an employee of Cubic. He works at Cubic's Beverly office as a "Fulfillment Supervisor", which gave him access to the secure room that houses the machine used to produce MBTA tickets. Townes allegedly manipulated the machine, producing authentic MBTA passes that were not recorded by the MBTA's central computer system as having been activated. These monthly passes have a value of up to $250 each, depending on the highest "zone" to which the passenger travels. Escobar allegedly worked with Townes to sell these fraudulent passes to passengers at a discounted rate, often through Craigslist, with no revenue going back to the MBTA. Townes and Escobar allegedly sold passes using the pseudonyms "Rich and Lisa Rohan."

Townes is accused of selling MBTA passes as far back as November 2007. Prosecutors also allege that Townes produced more than 20,000 fraudulent passes worth millions of dollars. At least $2 million dollars worth of those passes were never in service because the passes had been dated and activated for use as far in the future as November 2012.

In March 2011 alone, the MBTA traced the use of more than 400 of these fraudulent passes worth more than $70,000 that were used by passengers.

Consumers should be aware that the MBTA does not sell passes through Craigslist, private individuals or at a discounted rate. The MBTA also does not sell passes months in the future. If passengers hold a pass purchased this way, they may hold a pass that was fraudulently produced. Passengers who are concerned that they may have a fraudulent pass should contact the MBTA Transit Police at 617-222-1160.

Both Townes and Escobar were arraigned today in Salem District Court where they pled not guilty. They are scheduled to next appear in court on June 17, 2011, for a pre-trial conference.

The investigation was initially conducted by the MBTA and MBTA Transit Police. It was then referred to the Suffolk County District Attorney's Office. Due to Cubic's location in Essex County, the investigation was brought to the Attorney General's Public Integrity Unit.

Assistant Attorney General Jim O'Brien, Chief of the Attorney General's Public Integrity Division, and AAG Gina Masotta are prosecuting this case. MBTA detectives, personnel in the MBTA's Automated Fare Collection Department, state police assigned to the Attorney General's Office, financial investigator Jessie Dean, and the Financial Investigation Division under the supervision of Division Chief Paul Stewart were instrumental in this active and ongoing criminal investigation.

These charges are allegations. The defendants are presumed innocent until proven guilty.

In February 2011, AG Coakley announced the formation of the Public Integrity Division - the first division in the office focused exclusively on cases of public corruption and fraud. The Public Integrity Division investigates and prosecutes serious criminal misconduct involving (a) crimes committed against or upon public agencies, (b) corrupt public employees and public entities who engage in or conspire to commit larceny, fraud, bribery, gratuities, and other crimes in which there is a hidden personal financial interest, and (c) crimes that have a corrosive or harmful effect on public confidence in our government and other trusted institutions, including such crimes as perjury and obstruction of justice.